UAE government introduces increased fines and criminal penalties for violations of the UAE Labour Law

At a glance

• The UAE government has issued a new Federal Decree-Law (Decree) which amends specific provisions of the UAE Labour Law (Labour Law).
• The changes increase the fines imposed on employers for violations of the Labour Law.
• Criminal penalties have also been introduced for engagement in fictitious recruitment practices, including fictitious Emiratisation. The statute of limitation for claiming employment rights has been increased to two years from the date of termination.

---

It was announced on 12 August 2024 that the UAE government has issued the Decree which amends various provisions of the Labour Law relating to penalties. According to a post by the UAE Media Office on X, formerly known as Twitter, the changes seek to improve the efficiency and competitiveness of the UAE labour market. The amendments become effective on 31 August 2024.

Under the Decree, employers face an increase in fines ranging from AED100,000 to AED1 million for committing various offences. These include:

• employing employees without the requisite authorisations;
• recruiting people into the UAE but failing to provide them with work;
• misusing work permits;
• closing down or suspending a businesses' operations without addressing the rights of employees;
• illegally employing minors or allowing minors to work in violation of the Labour Law by their guardians; and
• engaging in any act which seeks to circumvent the laws or regulations governing the labour market (including fictitious employment and fictitious Emiratisation). In this regard, financial penalties will be multiplied based on the number of employees fictitiously employed.

The Decree also introduces criminal penalties, in addition to the fines outlined above, for engagement in fictitious recruitment practices which would enable an employee to obtain a benefit or advantage from a government entity. Notably, a criminal case can only be pursued at the request of the relevant minister or their authorised representative. The Decree provides the Ministry of Human Resources and Emiratisation with the power to settle any criminal case prior to a ruling being issued where an employer makes a request and pays an amount not less than 50% of the minimum value of the fine, provided that the employer returns all financial benefits obtained by any employee fictitiously employed.

Additionally, under the Decree, any appeal relating to a decision determined by the Ministry of Human Resources and Emiratisation with a value not exceeding AED50,000 must be directed to the Court of First Instance, rather than the Court of Appeal for final determination. 

Of significance, the statute of limitations for claiming employment rights under the Labour Law has increased from one year (from the date of entitlement of the right in question) to two years (from the date of termination of the employment relationship).

The introduction of increased penalties and criminal consequences by the UAE government suggests that stricter enforcement of the Labour Law should be expected by employers. As such, it is advisable that employers review their hiring practices to ensure compliance with the Labour Law. 

If you have any questions regarding the changes to the UAE Labour Law, please get in touch with your DLA Piper contact.